Closing Bell: 9/14/26

0:00Are you as confident as you should be when it comes to growing your business? Is your strategy ready to execute today? If cash flows aren't where they need to be, growth could be at risk, especially in the eyes of your investors, board members, and the business press. But when your business is operating in top shape, you've earned the right to grow. EY Parthenon can help you reimagine your business and execute a game plan for long-term growth. EY Parthenon. Solutions that work in practice. Not just on paper. The board recommends approving it. Regarding that seat on the committee, we're promoting quarterly earnings. Every day, shareholders meet to discuss important matters about the companies you invest in. Now you can easily make your voice heard. Vanguard Investor Choice gives you a say in the companies you invest in. With just a few taps, you can set your proxy voting preference for your index funds. Visit vanguard.com slash investor choice to learn more. Vanguard Investors own shares of our index funds, which own shares of the companies they invest in, available for Vanguard index funds that participate in investor choice. Vanguard Market Incorporation Distributor.

1:00Welcome to Closing Bell. I'm Leslie Picker in for Scott Wapner. Today, this make or break hour starts with a run in rates and a fly and stocks as new AI fears hit the street. We'll have the latest on the AI fallout coming up. But first, here is your scorecard with 60 minutes to go in the trading session. Well off the lows of the session, the NASDAQ now down only a quarter of a percent. The SAP down 0.3 percent in the Dow down about 0.2 percent. And that leads us to our talk of the tape with a 10-year yield. Topping 5 percent. It's backed off a little bit from that level. But what is at play for the Fed and Wednesday's highly anticipated rate decision? Big questions here. CNBC Senior Economic Supporter, Seabed Eastman kicking us off today with weather fed chairman Warsh has the votes to hike, Steve. Hey, Leslie, yeah, an analysis by Deutsche Bank of FedSpeak. It uses the Warks language model. It finds the 12 voting members of the Federal Mark Committee are the most hawkish they have been in the five years. They've been doing this study on a scale of 1 to 10 with 10 being the most hawkish

2:02or inclined to hike. The analysis of Fed communication gauges the 2026 voters as the most hawkish is 2021. A 7.2 score on a scale of 1 to 10. Deutsche Found nearly all voters have become more likely to hike since the last meeting on that notable rise in hawkishness is the beginning of the Iran war. The three centers for a quarter point hike at the last meeting, Hammock, Koshkari and Logan, they're seen as among the most hawkish. But importantly, Deutsche put Fed Chair Kevin Warsh right up there with them. Governors Cook and Bart took sharp turns towards that hawkish wing. There aren't really doves so much as centers that could go either way like governor Waller, New York Fed president Williams, Paulson from Philadelphia and vice chair, Jefferson. The probabilities features prices show 93% probability of a rate hike this week, 80% for a second hike in December and even 68% for a third hike in March 2027. These probabilities are volatile. They change quickly with data or Fed speak but they reflect where the market is thinking

3:04what the market is thinking right now. The 10 year near 5% along with the two year more than 100 base points over Fed funds, it's a signal to the Fed that the market thinks rates should be higher. And Warsh has already said, as you know, he's looking for those signals from the market. He has indeed and the market is giving him pretty volatile signals. So we'll see how he digests those along with the committee. Steve, thank you. Let's bring in our panel, MetLife's Drew Mattis, Ned Davis research at Clisold and Northwestern Mutuals. Matt Stucky, thank you all so much for being here. Drew, why don't we start with you? What's your expectation for this week with the Fed? Do you think we see a hike? I do think we see a hike. Do we think one's necessary? No, but it seems like the chairman walked himself into a corner and he's kind of he's stuck delivering. I don't think he says hawkish is actually that last graphic show. But I do think that he's committed to kind of moving rates higher and I think he's going to fall through with that.

4:05I think you'll also see former chairman Powell join him in that. What do you make of the dynamic right now with regard to the 5% yield? I mean, is the market doing anything with regard to tightening the financial conditions that may relieve some of the pressure on the Fed to do so? Yeah, well, this is what Warch wants the market to do and said, the question is, is it tail wagging the dog somewhat? Will higher long term rates enable the Fed to move a little bit slower? Yeah, I think that's the case, but I also think the market's sending a signal rather than the last three Fed shares where they were sending the signal to the market. So the move higher in yields, I think, gives the Fed a little bit of a more reason to raise rates at the September meeting, but it can mean they can go slowly with this cycle. Unlike the 2022 cycle, where the Fed had to be so aggressive, and that's what it really hurts equity markets, and the Fed has to hike quickly and violently. Yeah, we have seen a pretty gradual increase in yields over time, not that big spike like we

5:10saw a few years ago. Matt, you also expect the Fed to hike this week. What do you think is some of the key driver for why we have seen yields move higher in such a gradual fashion? Is it where oil prices are in the geopolitical situation? Is it what's going on with the deficit? Or is it the AI buildout and CapEx question, which of course is also come into focus this week with some of the commentary over the weekend? You know, I think the biggest driver of rates so far this year has just been a repricing of Fed expectations. You know, recall when we started 2026, about three cuts were priced into the Ford curve, and it's the mere opposite today, where three to four hikes are priced in over the next year or so. And so that's not really a concern about the fiscal situation. In fact, if you look at the curve between the five-year buck treasury and the 30-year treasury that's actually compressed by about 60 basis points a year to date, so that kind of premium that you would expect investors to demand for longer-dated treasures just simply isn't there. You'd expect that to be

6:11there if there was kind of major fiscal concerns that were escalating throughout this year. Additionally, higher oil prices are helping the inflation outlook, obviously. And so you can put all that together combined with a five-year plus amount of time where the Fed's been above the 2% inflation bogey. It's just time where the Fed's likely to move it, and the market's taking them there. The two-year relative to the effect and funds rate is about 100 basis points above kind of where Fed funds this today. That's the highest that we've seen since November of 2022. And so the market is telling Chair Wars that it's time to hike. Drew, does the 5% threshold to you matter for equities? Is it a psychological threshold in any kind of way that would create or spur some sort of a downshift in prices there? Well, I would say that breakpoints do tend to matter whether 5% of breakpoint though is kind of an open question. I mean, yes, U.S. equities are down today, but globally, equities were down today,

7:11and the U.S. market doesn't look as bad as a lot of others. But I do think, you know, what in my mind is troubling is kind of the feedback loop that was just talked about, which is, you know, we're expecting, you know, the Fed to hike interest rates because long-end yields are higher, but long-end yields are higher because we're expecting the Fed to raise interest rates. You know, not part of that calculation is how exactly is raising interest rates going to restrain inflation, and the reason we're not talking about that is because it probably won't. What do you mean by that? I mean that most of the inflation drivers in the economy are not interest rates sensitive. So if you take interest rates higher, maybe you'll hurt consumers, but if your plan is to get inflation lower by hurting consumers, what we're really talking about then is the Federal Reserve's got to come out and say we need the unemployment rate to be 5% and what it would be frustrating to be confident that inflation is going to go lower, and I don't hear people talking that way either. What should they do instead? Is there any sort of monetary policy solution or is it something that needs to be done more on the

8:14fiscal government side? Sometimes it's not a Federal Reserve issue, and so, you know, if I had my brothers, I'd have them wait, but I don't think they're going to, and moreover, I think they'll probably not only not wait, but they'll probably go more than once. Ed, what do you think happens if, for some reason, the Fed doesn't hike. It has been so volatile in terms of the likelihood of seeing a rate hike this week. What would that mean for the credibility test that everyone has been talking about with regard to Worsh's term at the top there? Yeah, the Fed has allowed the market to think that they're going to hike, so I think it would be quite a surprise if they didn't. Now, if the press conference afterwards with more discussion about how they expect to do that in the near future, maybe the impact would not be as great, but Worsh really does run the risk here of hurting his credibility because he came out so strongly in favor of the Fed focusing on

9:16inflation. It's not two points, something. It's two point zero, the Fed's been, you know, the inflation's been above the Fed's target for over five years, and so to not do it now, I think, would probably start to get the bond vigilantes going even more so, you could see, you could see the long end of the curve back up some more, which is why we think they are going to hike. Yeah, we've seen that response function so far. Everybody sit tight and Throbics Looming IPO just got a lot more interesting, especially over the weekend with some of the commentary from CEO Dario Amade and the blog post and some of the interviews. A lot of complications here. Kate Rooney joins us now to break down everything that she is watching. Hey Kate. Hey, Leslie, well, as you know, as well as anybody, this comes right in the middle of Anthropics IPO process CEO Dario Amade has been calling now for the industry to pretty much pump the brakes on rushing out new AI models in an essay over the weekend. Amade proposed a three-step plan to slow down and then oversee the creation

10:17of the most powerful AI technology often called the frontier of AI. He does ask for third-party evaluators, safety standards, and then international coordination as well. Amade has pushed for some of this in the past, but there is some new urgency given the new panic around the risk factors last week, anthropic researchers first tweeted about this in the existential risk around all of it saying that AI labs were quote gambling with our lives. Major AI leaders also rally behind Amade. That is extremely rare in AI to have this sort of consensus. You had to Elon Musk. Sam Altman tweeting their support of Amade very rare that these three would agree on that. I did speak to a bunch of people over the weekend who did argue that the safety push could actually help anthropics IPO positioning the company as a possible responsible player here also may help reduce some of the liability risk and then being public would bring more transparency as well. Multiple investors told me the growth rate right now is still off the charts. They do expect the IPO to go forward this year.

11:19I've also confirmed some sources that anthropic has seen back-to-back quarters at least of adjusted profitability. Lesslie. Yeah the biggest question mark is how you underwrite that risk and it'll be so interesting to see what they say about that in the risk factors whether it commands any kind of discount as a result of those liability concerns but all unanswered questions that we have to just wait and buy our time for Kate. Thanks for following all the latest of that. Matt how important is it that this anthropic IPO number one happens and is a success? Well I mean I think you're seeing the volatility of the market back and forth based on you know shifting sentiment on artificial intelligence and anthropic is some major piece of that and so successful IPO of anthropic goes back towards swinging sentiment back towards the positive direction. We've been seeing you know the AI trade kind of fizzle out throughout the summer as momentum has rolled over somewhat but you know with that has been you know the fundamentals of AI if you're just looking at rental prices of GPUs those are near your day highs. Just speaks to the

12:21ongoing capacity shortage that's out there for compute and so for that to be the status quo through year-end into 2027 you need capital and the IPO and the capital markets you know need to kind of continue to supply that capital to the likes of anthropic and the rest of you know the frontier space. Yeah it's fascinating Drew because there was a lot of commentary over the weekend about whether or not the AI infrastructure trade would hold up given all of the comments over the weekend we saw steeper declines toward the open but they've come back today I mean a little bit of pressure but nothing that would necessarily dent a potential IPO opportunity here. What do you think that tells you about the way that the market is pricing in these types of risks and as a result how well the AI trade can hold up from here? I think you know there's just so many different aspects of it whether it's you know where does the value accrue you know what what are the investments being made how are they going to pay off? You know I do think you know

13:26you know we're thinking about this like as the economy is on a hinge and the hinge is AI and the reason it's important to us actually is because it's important to the equity market and then the equity market is actually helping drive consumption so if you look at the main drivers of the equity market it's investment which is AI driven and it's equity wealth effect into consumers which is also AI driven and so I don't know what might cause a disruption there but I do know a disruption there would be negative for US growth going forward. Is concentration risk on your radar Ed in terms of just the importance of this trade working across not just the AI infrastructure upstream and downstream but also you know what we we were just talking about with regard to the wealth effect for consumers and the impact on spending as well. Yeah so it's um it's a little bit about house of cards I don't sound too alarmist with about it but you have in the top 10 stocks in S&P a lot of the ones we've been talking about today accounting for a record high percentage of the index and the US is is by far the largest stock market

14:33in in the world so if those companies run into trouble you're going to feel it around equity markets globally and because we don't have that nice demographic dividend of 150 200 000 jobs a month being added each month and Americans like to spend so they just spend the money that they're making so instead we're beholden to CapEx and then the high end consumer which again is back to the stock market back to those 10 stocks so it doesn't mean it has to end tomorrow but the the writings on the wall for how this economic cycle is going to eventually end and that is when this CapEx cycle does slow down I'm fortunate that the rest of the economy is probably going to slow down with it. Matt if you look at what's going on in the banking complex today you've got Bank of America down nearly 6% Goldman down for Morgan Stanley down three. Brian Moynihan the CEO of B of A on the tape speaking at the Barclays Financial's conference today talking about some guidance in terms of sales and trading investment banking for the third quarter looking a little lighter than the market

15:33may have anticipated and people extrapolating that how much of that do you think is due to say financing costs increasing concern around AI build out some of the big themes that we were talking about today and the impact on the banking system. Yeah you know the update we got from Bank of America today was really about their trading revenues and that's not as directly correlated with what's happening in terms of the investment banking business and the ongoing ability to secure financing to supply to the frauds your model makers. What he also pointed to though was you know continued strength in that interest income which if you're looking at the major source of high margin revenues for banks it is that kind of line item there. So really what we've seen throughout this year is a re-rating higher and the money centers based on the capital markets runnessons you know strong strong fee based business growth combined with continued strength in the AI growth and maybe that trading revenue line item starting to to moderate a bit but continued strength I think is probably the message that you're going to hear throughout the conference

16:36at Barclays. Yeah and obviously tough comps from last year as well as something to be noted with regard to sales and trading and why this upcoming quarter might be a little more muted depending on what we see still still pretty early days there. Drew Edden Matt thank you so much appreciate your time today. Let's send it over to Sima Modi for a look at names in tech that are outperforming today. Hey Leslie yeah the market does see cyber security as a winner should this AI slow down manifest named like CrowdStrike and Paula Alto are about 14% at this hour bank of America says the cyber incumbents should benefit if the AI industry decides that a third party is needed to sort of implement the AI guardrails. Now slow down in the frontier labs also seen as good news for software on this idea that it will these companies will have more time to catch up on their AI native offerings I would call out Salesforce which you'll see is outperforming ahead of its Dreamforce conference that is set to begin tomorrow. Another software giant moving higher is

17:37Palantir shares up about 3% DA Davidson saying the company would be a great candidate to lead the AI hardening effort and adding that it benefits from companies sort of pivoting away from the frontier labs and trying to create again their own native offerings using open weight models Leslie. Yeah certainly a beneficiary potentially there Sima thank you. We are just getting started up next more on the AI sell off and the backlash facing the industry why AI leaders are now calling for self regulation and what it could mean for the next wave of IPOs are tech and all ways in. Relive from the New York Stock Exchange you're watching Closing Bell on CNBC. With the Discovered Cashback card it's payback time when you earn cashback on everyday purchases. Activate and earn 5% cashback at different categories each quarter on up to $1,500 in purchases that's 5% cashback at different places each quarter like grocery stores on gas and at restaurants. It pays to discover terms applying see discover dot com slash five for details.

18:43Something amazing is happening in data management even though storage needs are constantly changing companies are only paying for what they need now that's because CDW customized an ever pure evergreen one SLA driven storage as a service solution delivering hybrid cloud storage that's easy to manage efficient and continuously evergreen simplify storage administration with ever pure and CDW make amazing happen find out more at cdw.com slash ever pure not every sale happens at the register before AT&T business wireless customer check out would take too long and create awkward delays at one point completing a transaction felt less like making a sale and more like a staring contest no one wanted to win now with AT&T business wireless transactions happen fast helping us to keep things moving that means less time spent dealing with delays and more time staying focused on the day ahead when the connection matters at sb at tnt get AT&T business at att.com slash 5G network. Welcome back anthropic announced its confidential IPO filing

19:48three and a half months ago and so far sources say that it still plans to proceed despite some of these fever pitch concerns over safety and that's because nothing we've heard in recent weeks especially from CEO Dario Amode is demonstrably different than what he or his peers have said before about the risks of uncontrollable AI and the need for industry wide coordination however slowing down the pace of model development while simultaneously contending with unprecedented regulatory political and security risks all while pitching investors was likely to be a lofty price tag is not an easy balance the big question is how well the market itself holds up and whether it remains conducive to these listings these types of listings all the commentary over the weekend is putting a bit of pressure on the infrastructure AI infrastructure space today but not a major major sell-off in a way that would derail some of these plans and anthropic seems to continue checking boxes toward its own listing including selecting the NASDAQ as its listing venue plus reportedly speaking

20:50with potential anchor investors including Nvidia the betting markets moving in a big way on the timeline of the anthropic IPO can does a brewer has that for us hey contestant there less what we're seeing here is that the odds of anthropic announcing an IPO this year are running at about 85 percent when they're loved in with other IPO candidates but on the specific question when will anthropic officially announce the IPO probabilities have taken a bit of a tumble since the company CEO and co-founder had at least that essay Saturday calling for the slowdown of AI development the market predicting that anthropic will announce before December 1st here you can see it right now it's at 73 percent but look how high it was and then we saw it dropping it fell to about 70 percent and then the probability the probabilities for an announcement before September before November 1st rather are now at 58 percent they had plummeted 20 percent on the release of that essay the impact by the way wasn't just to anthropic as well if you look at the question of open AI announcing an IPO the odds had

21:55reached a high in late May of 93 percent and then look what happens a steady decline all the way down to the release of that essay they've been on a steep descent and just hit a low of 1 percent before rebounding now to 4 percent that's the probability on open AI so less you're seeing a lot of action and a lot of movement on these markets can't has to do we know if those are roach o launch dates listing dates pricing dates they say announcement and so and then and then when you look at the closing on that you have to go back into the details remember on all of these markets the devil is in the details by what source what does official announcement mean all of that matters when it talks to a closed market but considering that it's still open and trading it's not a closed deal yeah fascinating can't ask that thank you so much let's talk more about the AI race to go public joining me now big technology founder Alex Cantrowitz is a CNBC contributor you have been all over this horse race this saga the question about IPO can can a company go public in this

23:01environment I think is a really big question right now if you were at the heart of some of these big existential questions concerning safety and regulation and politics and what it means for society I mean is it one of those things where it's just as simple as well if the market holds up they can go public I think it is and opening I has said you know we're not going to go public this year so Sam Altman over the past couple days has said we're going to not going to IPO in 2026 maybe that'll happen in 2027 but I think anthropic still can go public I mean obviously there are some concerns about what the technology can do but it's it's technology is not behind the most concerning hack which is open AI's hack of hugging face and more than that even if you took the current models anthropic still has a very sizable business so you can slow down the release of the upcoming models and there's a question of how slow that's going to be but but even if you do that the current technology I believe is strong enough that you can make a business case to Wall Street and still go out this year they've already signed up for billions of dollars worth of compute so

24:03their expenses are kind of known if they slow down the pace of model releases what does that mean for margins if anything yeah well it could hurt the margins right because you're ultimately like the smarter you make the AI if you're running it on the same underlying technology you're going to be able to make more money so that could hurt margins but I still think they'll be able to do pretty healthy margins with the technology that they have today that wouldn't be a major concern to we also have low-tony Plexo capital founding managing partner with us as well low do you feel like this is an inflection point or is this just part of the journey that these IPOs have been on with regard to kind of balancing all these competing pressures while looking at the market and saying maybe the window is actually open regardless of the noise that's out there yeah that's a great point Leslie because when we look at the actions that Darya was taking he was clearly planning on going through the ideal process to prepare while at the same time

25:04raising these issues with his peers in the space to determine how to best address the the issues and so I you know I think this is what we're going to see that's going to be new because as we know typically technology outpaces the ability for regulation in the past we've seen regulation look through the rear view mirror and things like social media but now we're talking about AI which as President Trump has made very clear this is more of a national security address so I think ultimately we will see anthropic of public maybe it'll be this year or maybe it gets pushed out to next year what is slowing down model development mean for catbacks I ask Alex because an IPO we've seen especially in this environment is a necessity you're raising equity capital of potentially unleashes access to investment grade credit ratings which is something that they've been reportedly lobbying or at least their bankers have on their behalf in order to access even more

26:04and deeper markets at cheaper cost of capital so you know if you're slowing down the pace of development does it make those liquidity events as necessary as pressing or can you kind of also maybe take a pause and say maybe we should give this security stuff priority and the the financing will happen when it happens yeah I think the liquidity events are still extremely pressing and that's because there's so much demand again talking about the current AI offering that's out there today there's so much demand for this stuff that you want to be able to meet the demand and so most of AI is moving towards inference or using the models not training the models now of course if you're a company like Genthropic or a company like OpenAI you want to do both you want to train and you want to provide for inference but Anthropic in particular has been singled out by those using this technology as a company that needs more compute because it has these models and people aren't able to use them to the extent that they want so they definitely have to continue to pursue this liquidity to be able to meet the market or what's going to happen is people are going to go over to

27:05OpenAI yeah yeah it's fascinating guys stay with me we are getting some news out of Washington Megan Kasella has that for us hey Megan hey Leslie we just learned that President Trump met privately last week at the Republican National Convention with Sam Altman of OpenAI this comes according to MS now who's citing three people familiar with the meeting they say this was a private meeting that helped and backstage at that conference in Texas and they only got a brief overview of the discussion saying that it was centered on AI and it's growing power and that Altman was the one who requested the meeting with the president now Leslie of course this comes as we're hearing very different things from both of these men on AI Altman joining other AI executives this weekend and saying there is a need to slow down and to pace the frontier but everything we've heard from President Trump since then has been very different really dismissing all of these concerns he called them a hoax today he says the only regulation or the only guardrails that the U.S. needs is a strong and smart president referring to himself also saying it's just a sick conspiracy going on against AI and data centers dismissing the idea or dismissing the fact that these concerns are coming from the AI

28:08leading researchers and executives themselves but now we know that President Trump and the OpenAI Chief met privately just last week Leslie interesting insight there Megan thank you low as we think about the political implications of this he became a hard press to think of another industry or another scenario where the companies themselves that are calling for additional regulation that are calling for their own growth to be slowed while the government is saying no we have to win this race keep going keep pressing forward what do you think this all transpires wow it's so fascinating to watch this play out in real time because what we're seeing is a prisoner dilemma not only within the companies within the United States and this really comes down to a pace versus race and so we need the companies to come together so that everyone can agree and that's looks like it's happening within the companies within the United States now we have this separate issue around a prisoner's dilemma contextualized within the framework of AI and US leadership

29:14being important for national security so now the prisoner dilemma ships to a focus between the US and China and so can we yet China to agree to coordinate with us again to pace the release of these models or this China decide hey this gives us an opportunity to actually race ahead yeah there's also this question Alex about product liability if one of these AI agents goes rogue who's liable what does that mean from a risk factor standpoint as you're trying to figure out what the appropriate discounted cash flow model looks like for a company like this I know it's likely not based on that but in terms of as you think about tam relative total addressable market relative to some of these risks that would be costly potentially in areas that are not yet settled law what what does that mean in terms of needing that regulation for investors do they need that to feel comfortable or are they already comfortable because these companies have

30:14gone through so many rounds of private investments that it's kind of already been figured out privately well I don't think investors are going to be happy if there is any regulation that happens here because if we've seen the way that Congress has tried to regulate tech in the past they've been unable to do it the rules and regulations around tech is just so difficult and Congress's knowledge is so limited that when they try to tip their dough their toe in the water they don't do anything they have some good YouTube moments in the hearings but then the when it comes to put time to put pen to paper they really struggle to do it so I don't think we're going to see regulation coming from the US Congress but the thing is what you could see is a different type of regulation and that's something that happens on the municipal level the local level and the state level where all three levels are considering bands of data centers right and so it is remarkable that these CEOs are coming out and saying hey you know things can be dangerous let's put these frameworks but the frameworks that they're proposing and the federal action that they're thinking we should take is just something that's not very realistic we're probably not going to see Congress

31:14enact laws like this but they're getting out ahead of it because what they see very clearly is that the data centers which they need to grow are under threat you know this week you're going to see Bernie Sanders and Steve Bannon get together in an event to talk about data centers in AI that's the type of things we just don't see in the United States often but that sort of bipartisan agreement about the risks of AI is happening now in the shadow of you know a potential IPO. Yeah they're the physical manifestation of all of these fears whether it's job loss whether it's security implications or the decimation of society as certain researchers have suggested there's a potential 10% probability of I mean it makes sense why you would see these types of political leaders come together on this issue and I kind of wonder whether raising these concerns about safety low attenuate these concerns. Yeah they do and it's a good point I mean this is the challenge that we face right now because not only are we looking at the importance within the United States of

32:18leadership with AI and there are many different ways that we can address it I mean Dario laid out some both in his blog post as well as an interview once yes we could look to further tighten the restrictions on the components that are necessary to be able to provide that AI model development and restrict those to China right but we have this other important issue as well which really requires some attention on why it's important to think about US leadership and AI. Basically if we look at the AI trade it permeates throughout the entire economic ecosystem right now so this is definitely front and center and you're right we do see some strange bedfellows when it comes to looking at folks from both the left and the right coming together which I think shows the importance we also saw this importance percolating in how there were many communities that were really giving backlash against data center development if we really start to break that down

33:21and unpack it what we see is not so much not in my backyard but I think it really spoke to this issue that we're facing now which is this fear of AI and how it should be regularly. Yeah absolutely Alex slow thank you both so much for coming on on a very important inflection point it really feels like with regard to AI and its role in society and the markets. Coming up as a rate hike inevitable our next guest says one is likely coming this week he'll break down how he's positioned closing bell will be right back. Having lots of choices sounds like it would be great who doesn't want more flavors of ice cream it turns out the answer is us too many choices can make us anxious overwhelmed. I'm Shankar Vedantam host of the Hidden Brain Podcast and YouTube channel each week Hidden Brain brings you fascinating science-backed insights about human behavior so the next time you have to choose choose Hidden Brain on Spotify Apple Podcasts YouTube or Hidden

34:23Brain.org. With the Discovered Cashback Card it's payback time when you earn cashback on everyday purchases activate and earn 5% cashback at different categories each quarter on up to $1,500 in purchases that's 5% cashback at different places each quarter like grocery stores on gas and at restaurants it pays to discover terms apply see discover dot com slash five for details the kernels cooked up a new ten dollar bucket of the day just for you Monday 10 wings for $10 Tuesday a piece fried chicken for $10 Wednesday a tenders for $10 Thursday 10 wings for $10 Friday 24 nuggets for who you guessed it didn't you $10 the $10 bucket of the day deal every week day only at KFC its finger lick and go. Prices and participation variables apply last not available on their party ordering platforms tax extra. Welcome back to closing bell with the 10-year yield

35:25topping 5% today for the first time since 2023 where are the best opportunities in the market right now joining me now to discuss this Carson Group Chief Market Strategist and CBC contributor Ryan Dietrich Ryan I think a lot of people see yields at that level and they wonder what can go wrong you are focused on what can go right which to me suggest you think it will maybe stay at these levels if it's worth repositioning your portfolio. Well we do lastly thanks for having me back appreciate it you know little context right in the late 90s we had nominal GDP running about 6% that's ballpark where we are right now last quarter was 8% nominal GDP but we average let go just a hair under 6% those final four years of 90s now I get it all times are different yes but at Carson we said all year this is an inflationary growth environment meaning yields are going to go higher it's going to be sticky inflation maybe three three-throwing inflation but you know what the economy is going to do pretty darn good and his bull markets alive and well so we still think you want to be overweight stocks underway bonds and yields are probably keep

36:25out working the way higher here and so far we haven't seen much in the way of credit stress do you expect that to continue well I think so I mean you listen we watch it every day now let's what do we know right we know high yield spreads are showing virtually no stress I mean when high yield is outperforming kind of intermediate term bonds on a relative basis the way I learned it that that means there's no monster out of the bed I mean early this year in early 2025 before all the trouble started we saw stress in high yield credit markets we we're not seeing that yet and then you know I mean there's different ways to look at this but one more what's really kind of lagging just last week on a weekly closing basis on a relative basis we had utilities and staples both close like their lowest levels ever relative to the SP 500 those are defensive areas but not getting a bid I get the markets choppy I get the all headlines we understand all that but that's probably a sign this market wants to continue to work its way higher not lower at what level are you concerned that it does start to become more of a pressure point for the consumer for their credit card bills for buying a house I mean is 5% that level or does it just depend on how long

37:31it stays there yeah kind of I think it depends how long it stays there I mean again I think we work our way higher still I mean we might go to 6% you know over the next year or so we don't think that's like the end of the world I mean consumers there are fits and starts when you look kind of pull back the onion you know the consumers actually still in pretty good shape balance sheets are some of the best shape they've been in a couple decades I mean yes there's a lot of depth but there's also a lot of equity and we can go down you the K shaped economy path we understand the issues that are there but put a cherry on top here the labor market we've been saying for several months labor market's better than people give it credit for with that data we saw it last month we think that's a start to probably you know maybe say 50 to a hundred thousand jobs on it I know it doesn't sound like a lot but that is more than enough in our economy now to keep things going and bring back that consumer confidence which is still really low every time you turn around yeah just to reiterate that put a fine point on it you've got the city CFO Gonzalo Luchetti speaking at the Barclays global financial services conference right now and he says consumers continue to spend consumers continue to pay their bills the simplest version so and he said they're seeing about 6% year on year spending

38:33momentum so you know that seems to be the case from the financial services perspective as well I know you are overweight financials potentially in part due to that Ryan thank you so much thank you coming up apple and open AI going head to head in court today as a high stakes trial kicks off we're bringing the latest straight ahead closing bell will be right back welcome back apple and open AI facing off as a high stakes trial gets underway today McKenzie Cigallos has the details for us Mac as if there wasn't enough AI news already today and today open AI telling a court that its first consumer device is not coming anytime soon pushing back on reports that it could arrive by the end of this year that is a departure from the timeline that CEO Sam Albin had previously floated where he said that open AI already had prototypes in hand and was considering previewing a device this year now apple meanwhile pushing for immediate access to the startups products schematics arguing that it needs to determine a sap whether it's trade secrets are being used in open AI's hardware

39:36work now the judge didn't give apple what it wanted today instead telling both sides to narrow their requests and come back with a joint plan for what should be exchanged so discovery very much shaping up to be the real battleground in this case apple wants access to devices and accounts that may contain its trade secrets records showing who saw that information plus open AI's actual hardware designs open AI saying discovery has to go both ways and accused apple of taking a shoot first think later approach the next step here in this legal battle is october 14th when both sides return to court and the judge just starts deciding what apple and open AI will actually get a discovery Leslie fascinating Mac thank you so much McKenzie Cigallos for us up next the 10 year hitting 5% in housing stocks are feeling the heat while the surgeon yields could deal another blow to an already challenged housing market that and much more when we take you inside the market zone welcome back we are now in the closing bell market zone Mike Santoli and Wilmington

40:38trust Megan's shoe are here to break down these crucial moments of the trading day plus Dan Olick is watching mortgage rates as the 10 year yield top five percent and fill the bow with more on what fuel prices mean for the travel industry that's going to make Santoli Mike really interesting day today a little bit more pain earlier in the morning and things have bounced back a little bit yeah and once again Leslie the pain has been localized that's what this market does it was another rotational rescue there is a lot of pain in semiconductors all along the AI hardware food chain but it's being made up elsewhere obviously mag seven type stocks are working you do have that relief coming after the spike above 5% in treasury yields which also seem to lend some downside in oil prices those two assets have been very connected and so when you've got people buying bonds at the 5% handle it seems like it also added to some pressure to the down so that enabled a little bit of strength in the eco weight S&P so we are kind of where we were we're still in this range the fix under 17 even with all of this noise around it so we'll see if

41:44if it can hold again and if we can get some clarity on what this all might mean in terms of the AI build out trajectory yeah whether to remarkably scary commentary over the weekend I think there was some questions about how it would open this morning and looks like it'll close down all the lower areas on day yeah yeah it's why it's probably good to release that kind of news on a Saturday Mike what is coming up on overtime today yeah we'll get into all the issues we have Henry McVeigh from KKR give his perspective slightly longer term view on what it all means all right looking forward to that Mike thank you let's get to Diana Olick with the latest on mortgage rates as the 10 year hits 5% today Diana well Leslie the average rate on the 30 year fits jumped five basis points this morning to 7.17% according to mortgage do news daily that is the highest level since January 2025 of course mortgage rates loosely follow the yield on the 10 year which as you said crossed over 5% to a multi year high mortgage rates are now up 29 basis points in just the

42:45past week stocks of the big builders however they held on mostly in the green on the day especially after yields fell back a bit this afternoon the same cannot be said for digital realty and equinix the two big data center reads they're both down between 4 and 5% on all the news of a potential AI slowdown and I'll have exclusive reaction on that from digital realty CEO Andy Power in tomorrow's free property play newsletter make sure you're signed up CNBC dot com forward slash property play Leslie I am signed up and I'm looking forward to that one Diana thank you you let's go get over to filibow taking a look at what these fuel prices mean for airline stocks fill well a mixed day today Leslie in terms of how the airline stocks did but this has not been the sector to play since the beginning of August in fact if you look at the four largest airlines here in the United States since basically August second August third somewhere in that time frame you see that they're down anywhere between eight and 13% and here's the reason why look at what Jeff Fuel has done this year remember the spike in March after the prices came back

43:50down people said okay well we've seen the worst of it that's not the case they just hit the an all time or the year today high I should say just a few days ago still remain elevated that's why the ARCA index it's down 15% over the last three months not a surprise here that you see the airline stocks moving in verse two what we see with the jet fuel prices Leslie the thing to watch is that we will hear from a number of executives from airlines this week do any of them change their guidance for the third quarter that's what we're going to be watching yeah my guess is at least some of that will be passed on to the consumer in terms of ticket prices so thank you let's bring in willing to dress Megan shoe to look at the the clothes today so you recommend that investors stay overweight equities but brace for a normal market pullback in the coming weeks what's the key driver of that well well Leslie when we had markets hit highs a couple of weeks ago really we're not that far off of those but we had three things that were really supporting the market AI

44:51investment cycle and earnings the potential for the fed to be on hold or even to have a dovish pivot towards rate cuts and then some reduced tension in the Middle East and all three of those have sort of crumbled a little bit if you will but I think the underlying economic story is intact we have a bit of a Goldilocks economy where we have solid economic data we do expect continued disinflation especially as you think about new base effects as we move into 2027 that should see the core PCE move materially lower and with that we think the fed could be in a position to reverse the rate hike that we're likely to get this week so I think if you think about a normal year a five to 10 percent correction is the norm that is kind of the seasonal period that we are in right now post earnings tends to create a bit of a vacuum but I think as we move into and beyond midterms we're going to see the market recover and sentiment return into the end

45:52of the year yeah it's certainly interesting times and obviously some key questions as to whether all of those factors are are priced in at these levels or whether there's more pain potentially to come Megan thank you so much Megan she for us do you love hair raising allegedly true stories about the paranormal then you should summon the podcast scared to death it's the popular horror series with more than 60 million downloads to its name and it's co-hosted by me Dan Cummins and me Lindsay co-host and also Dan's wife each week on scared to death we share bone chilling tales from old books and creepy corners of the web and even some submitted by our listeners all designed to make you want to sleep with the lights on

46:55think you can handle the horror tune in to scared to death every Tuesday at the stroke of midnight to find out